Business

McDonald's to upsize in Africa

Janice Kew, Jason Folkmanis

Africa will form part of a growth strategy for the world's largest restaurant chain, McDonald's.

The McDonalds outlet in Sandton City mall, Johannesburg. (Jeff Attaway)

McDonald's is looking at potential new markets in Africa after the world's largest restaurant chain entered a new southeast Asian country for the first time in more than two decades.

McDonald's will look at a number of nations for restaurant locations in Africa, which is expected to be part of the fast-food chain's future growth strategy, chief executive Don Thompson said on Monday in an interview in Ho Chi Minh City. On February 8, the Illinois-based company opened its first restaurant in Vietnam, where it's trying to catch up with rivals, including Burger King Worldwide.

"We're looking at the opportunities that Africa may yield," Thompson said. "We're in ongoing dialogue to build appropriate relationships [on the continent].

"There's quite a few countries across Africa we want to look at, but Nigeria clearly is a large country that has opportunity," he said.

The company is looking to developing nations for expansion. The chain posted fourth-quarter profit that was little changed from a year earlier as US same-store sales fell. Sub-Saharan Africa's economy will expand 6.1% this year, compared with global growth of 3.7%, according to the International Monetary Fund (IMF).

Nigeria's economy has expanded an average of 8.2% annually since 1999, pushing its per-capita income as of last year to $1 725 from $310 in 1999, according to IMF estimates. The west African nation has a population of about 170-million people, the most on the continent.

Burger King
Africa is home to the world's youngest and fastest-growing population, business consulting firm McKinsey said in a 2010 report that estimated household expenditure in the continent would expand to $1.4-trillion a year by 2020.

Burger King last year opened its first restaurant in South Africa and said that it would look to open outlets in Botswana, Mauritius, Mozambique, Namibia, Zambia and Zimbabwe, without specifying a time period. There are 29 Burger King branches in Vietnam, according to Bryson Thornton, a spokesperson for the Miami-based company.

McDonald's new 350-seat branch in Vietnam marks the company's first new market in the region since Brunei in 1992. In Africa, McDonald's has outlets in Egypt, Mauritius, Morocco and South Africa. – Bloomberg

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